Both JPMorgan Chase & Co. and Bank of American Corp. have recently revised their predictions for how much home prices will grow this year, as diminishing inventory and low interest rates continue to bolster demand.

JPMorgan analysts wrote in a March 13 report that they believe U.S. home prices will gain an average of 7 percent through 2013, more than double what they had predicted earlier this year. The company’s analysts are also now forecasting that prices will rise 14 percent from now through 2015.

Bank of America had bumped up its price prediction to a gain of 8 percent in 2013, up from their earlier estimation of 4.7 percent.

The new predictions are based the continued lack of housing inventory, super-low rates as dictated by the Federal Reserve. There are fewer homes on the market today than there have been in 13 years, according to the National Association of Realtors, with inventory falling 4.9 percent in January to 1.74 million homes for sale.

And investment firms have been steadily buying up most of the distressed properties on the market, removing many of the discounted homes from play. Blackstone Group LP, a private equity firm, purchased 20,000 single family homes in 2012 in order to rent them out. And there many be fewer and fewer foreclosed properties and short sales for anyone to buy in 2013. Foreclosure data firm RealtyTrac recently reported that foreclosures fell 29 percent in February from the year before. With fewer discounted properties available, prices will continue to feel upward pressure.

Interest rates are also likely to stay low through the year as the Federal Reserve has pledged to keep up its purchases of bonds until the labor market has “substantially” improved. Rates have been bumping along the historic bottom with the 30-year fixed rate mortgage interest rate averaging 3.53 percent in February, according to Freddie Mac.

Home prices have already made major progress in the past year, even as they remain 29 percent below the housing boom peak in 2006. According to the S&P/Case-Shiller home-price index of 20 cities, home prices grew 6.8 percent in December from the year before.

The content on this site is provided for informational purposes only and is not legal or professional advice.
Advertised rates on this site are provided by the third party advertiser and not by us.
We do not guarantee that the loan terms or rates listed on this site are the best terms or lowest rates available in the market.
All lending decisions are determined by the lender and we do not guarantee approval, rates or terms for any lender or loan program.
Not all applicants will be approved and individual loan terms may vary. Users are encouraged to use their best judgment in evaluating any third party services or advertisers on this site before submitting any information to any third party.